Marriott beats in 1Q25 with modest guidance trim

BETHESDA, Maryland – International RevPAR strength and higher gross fees led Marriott International’s first quarter 2025 earnings beat, while 2Q25 guidance was slightly below consensus and the full-year outlook was off modestly with Adjusted EBITDA down just over 1% versus prior forecasts.

RevPAR during the first quarter was +4.1 with the U.S. and Canada better than expected at +3.3%, while international was at +5.9%. U.S. government business RevPAR was off 10%.

Marriott said March was a tougher month after a strong start in January and February, but April showed steadier results after the initial "shock and awe" of U.S. government activity at the start of the new administration.

ADR was up 3% and was occupancy 1 percentage point system-wide. Group was particularly strong +8% system-wide.

In 1Q25, gross fees were $1.275 billion (+5.4% YOY); Adjusted EPS was $2.32; Adjusted EBITDA was $1.217 million – all beats versus consensus.

The strong momentum in our development activity continued, with record first quarter signings of over 34,000 rooms, of which two-thirds were in international markets. Conversions remained a key driver of growth, representing around a third of our room signings and openings.

Anthony Capuano

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Citing somewhat softer expectations in the U.S. and Canada and tougher visibility into the second half of the year, Marriott guided RevPAR -50 bps to +1.5% to 3.5%, while Adjusted EBITDA -25 bps.

With the acquisition of the citizenM brand last week, Marriott said that system-wide net unit growth should approach 5%, which includes >50 bps of contribution from citizenM. It estimates stabilized franchise fees to be $30 million (11.8x multiple), likely to occur in 2027E or 2028E.

The company added roughly 12,200 net rooms during the quarter, including more than 7,300 net rooms in international markets., and net rooms grew 4.6% from the end of the first quarter of 2024. At the end of the quarter, Marriott’s global system totaled nearly 9,500 properties, with approximately 1,719,000 rooms.

At the end of the quarter, Marriott’s worldwide development pipeline totaled approximately 3,808 properties and over 587,000 rooms, including 171 properties with over 27,000 rooms approved for development, but not yet subject to signed contracts, up 7.4% year-over-year.

The quarter-end pipeline included 1,447 properties with nearly 244,000 rooms under construction, including hotels that are in the process of converting to the Marriott system. Over half of the rooms in the quarter-end pipeline are in international markets.

“Despite heightened macro-economic uncertainty, global RevPAR rose over 4%, primarily driven by higher ADR, and our development momentum remained positive,” said Marriott President and CEO Anthony Capuano. “Our international markets experienced particularly robust growth, with RevPAR increasing nearly 6%, led by double-digit gains in APEC. RevPAR in the U.S. & Canada rose over 3% in the first quarter, although we did see slower growth in March.

“The strong momentum in our development activity continued, with record first quarter signings of over 34,000 rooms, of which two-thirds were in international markets. Conversions remained a key driver of growth, representing around a third of our room signings and openings.”